Private insurance gouging customers, Gov't run much cheaper

[Thanz]

A study has just come out that concludes in Canada, public government run car insurance is much cheaper than private insurance. The four provinces with Government run car insurance schemes all have lower premiums than private systems. Who says that Government means more costs and that things would be better if the gov't butt out and let corporations do stuff? Shanek - any comment?

Article here (http://www.globeandmail.com/servlet/story/RTGAM.20030910.wauto0910/BNStory/National/?query=insurance)

Some choice snippets:
"Some consumers in Toronto pay up to 500 per cent more for auto insurance than do equivalent consumers in provinces with public auto systems," Bruce Cran, national secretary of the CAC, said at a Wednesday press conference.
The CAC said its main finding was that consumers in the four provinces with public auto insurance — British Columbia, Saskatchewan, Manitoba and Quebec — pay the lowest rates. The national study of auto insurance rates across Canada includes data from 40 cities in all 10 provinces, examining more than 7,000 rate quotes and questioning whether the same driver would pay more or less for auto insurance if they had the same vehicle, same driving record and same claims history in another city. The CAC pointed to one unique location in Canada that enables a side-by-side comparison of public vs. private auto insurance rates: Lloydminster, Alta., and Lloydminster, Sask.

Saskatchewan has a public auto system while Alberta has a totally private system.

"A person living 30 metres across the street on the Alberta side can pay up to $5,000 more each year for the same vehicle and get worse insurance coverage," Mr. Cran said. "If you live on the Saskatchewan side, you're paying a fifth less than if you lived in Alberta. No wonder they're so happy.".

[Segnosaur]

Before I come to any conclusions, there are some things I would want to know:

- Is the government-run insurance company making any profit (or at least breaking even). If the public insurance is operating at a loss, then its not really cheaper; it just means that people are paying for the insurance through taxes rather than premiums

- Are there other laws/factors that could be contributing? For example, is there a higher incidence of car theft and accidents in the provinces with private insurance compared to public insurance? What about weather? (You'll get more winter-related accidents in Ontario than in BC.) What about driver's liscence training? Which provinces have 'no fault' insurance? Are there limits on how much you can make an insurance claim for in certain provinces?

I'm not saying public insurance isn't cheaper than private insurance; I just think more information is needed to make any conclusions.

[CapelDodger]

It seems a truism that an insurance system that is run as a pool rather than a profit-making enterprise is going to be cheaper for end-users. Rather obviously, the end-user is not contributing to somebody's profit. As long as administration of the pool is efficient and even-handed - which can be guaranteed by transparency and trustees - it provides a necessary overhead at minimum cost.

[Thanz]

Segnosaur -

I do not know the answers to all of your questions. I will say this about the weather, however - Winnepeg is the cheapest among Provincial capital cities, and it is no stranger to bad weather.

The full study can be found here (http://www.cacbc.com/reports/CAC%20National%20Auto%20Rates%20Study%202003%20.pd f)

[CapelDodger]

Thanz: it's the in the places that are strangers to bad weather where it causes problems.

[Thanz]

Originally posted by CapelDodger
Thanz: it's the in the places that are strangers to bad weather where it causes problems.
Segnosaur specifically talked about winter accidents. BC gets much milder winters than Ontario. Winnepeg gets worse winters. Ontario winters kinda suck. But both Vancouver (not used to it) and Winnipeg (very used to it) are cheaper than Toronto (used to it).

[corplinx]

It does seem logical that if government puts the burden of having car insurance on you, they should run the insurance as a not-for-profit self contained unit (like the post office).

[Segnosaur]

Originally posted by Thanz
Segnosaur -

I do not know the answers to all of your questions. I will say this about the weather, however - Winnepeg is the cheapest among Provincial capital cities, and it is no stranger to bad weather.


Yeah, but you don't have to worry about running into things on the praries.

Just kidding.

But seriously, some of the other factors I mentioned (like rates of car theft) may come into play here; I figured Ontario (with a higher urbanized population) may have more problems than Manitoba/Winnipeg.

Another thing that I didn't seem to notice in the report (I may have over looked things) is cost of living... Its one thing to complain that Ontario's insurance rates are higher than Manitoba's, but if all prices and wages are higher in Ontario to begin with, then the higher insurance premiums are not out of line.

[CapelDodger]

Thanz: The reliabilty of winter weather is clearly not the only influence. Toronto's additonal problem I can only guess at but, off the top of my head, fender-benders? Theft from and damage to vehicles?
For a few months I used to commute around the North Circular in London. The idea of "sensible distance" was laughable; you were effectively a log in a raft of traffic governed by lights. Lanes appear and vanish seemingly at random, many of them filtering you the wrong way; street-signing is part of an ongoing experiment. And yet traffic flowed efficiently without contact most of the time because the drivers did it every day and could co-operate. The presence of a stranger to the system was glaringly obvious, and at such times the whole delicate choreography could go to pieces in seconds. Driving isn't that dangerous as long as what you experience is what you're used to.

[Segnosaur]

Ok, I did a little more research. Although not a complete explanation, I have found that:

- Some provinces with public plans do break even, but others do operate at a loss at least part of the time
- At least one province (Sask.) limits payouts for certain types of damage (soft tissue), which (for example Ontario) does not.
- Many of the provinces with public systems offer just basic insurance, with private insurance used when people want better coverage

See: http://www.ftlcomm.com/ensign/desantisArticles/2003_800/desantis810/privateOrpublicLP.pdf (Covers mostly a pro-public insurance point of view, but with some information on both sides)

And, if you want something that's a bit scary: See: http://www.canoe.ca/NewsStand/TorontoSun/News/2003/09/04/175543.html


The report, to be released today by the right-wing think tank, says that public auto insurance leads to more deaths, injuries and property damage because bad drivers aren't forced off the road by higher premiums